City Considering Take Stand In Railroad Law Suit
The city of Sulphur Springs will continue to partially self-fund health insurance for city employees, the city council decided during their regular August meeting. Also discussed during a closed executive session was the city’s potential involvement in law service involving rail service.
Re-insurance contract
Sulphur Springs sought bid proposals for re-insurance coverage, as has been done for the last 9 years. Five bids were received, with those from Blue Cross, Liberty and Highmark reported to be competitive. The partially self-funded employee health insurance benefit program consists of a combination package of individual and specific stop loss and aggregate reinsurance coverage.
The bid from HM Life was recommended by Sulphur Springs Human Resources Director Gordon Frazier and approved by the city council. Proposals were to include a $80,000 specific stop loss attachment point as well as other levels. At $75,000, the lowest fixed cost was submitted by Blue Cross. Highmark was the lowest fixed cost at the $80,000 and $85,000 stop loss points. Highmark also offered a 72/12 contract term, which means the company would cover claims going back as far as 60 months and forward claims for 12 months. The other carriers’ contracts would go back only 12 months, according to Frazier.
Highmark or HM Life with the $80,000 specific stop loss with term coverage, bid a total fixed cost of $344,031, attachment point of $1.2 million and total maximum plan cost of $1.55 million. That means the city would at max pay $1.2 million for total claims for the year beginning Sept. 1, 2019 and ending Aug. 31, 2020; anything over that amount would be covered by the re-insurance carrier. The company would essentially underwrite any losses to the employee that are over $80,000. The plan is for 145 employees according the HR director.
Blue Cross/Blue Shield of Texas will continue to serve as administrator for all administrative services, with Blue Choice Network as the plan network.
According to information provided to the council by Frazier, the city’s claims are usually below estimates for the year. They are currently estimated to be $850,000-$900,000, a little lower than the expected claims of $900,391 and attachment point claims of $1.125 million in the 2018 proposal, and the $915,000 budgeted for 2019.
The city council approved the HM Life bid based on Frazier and Finance Director Lesa Smith’s recommendations.
Executive session
The council also discussed during executive session the possibility of joining a law suit involving rail service in Sulphur Springs, but opted to take no action on it at that time, according to City Attorney Jim McLeroy.
Having access to a shortline railroad is important to business due to the amount of product transported in the county annually. Without the railroad the product would have to be trucked in at a higher expense, according to the city attorney. The lawsuit is between Blacklands Railroad and Northeast Texas Rural Transportation District, known as NETEX.
McLeroy said the city will look at the matter again in a future meeting, and consider joining one side of the suit. With budget work sessions anticipated throughout the month, the matter is expected to be discussed again before the regular September city council meeting.
